1. **Problem statement:**
A company sells goods at 8000 per unit. The total cost (TC) to produce Q units is given by $$TC = 900000 + 3000Q$$.
We need to find:
a) The break-even point (BEP) quantity.
b) Profit or loss if 200 units are sold.
c) Profit or loss if 150 units are sold.
2. **Formula and rules:**
- Revenue (R) = Price per unit \( \times \) Quantity = $$8000Q$$
- Profit (\(\pi\)) = Revenue - Total Cost = $$\pi = 8000Q - (900000 + 3000Q)$$
- Break-even point occurs when Profit = 0, i.e., Revenue = Total Cost.
3. **Step-by-step solution:**
**a) Find BEP:**
Set Revenue = Total Cost:
$$8000Q = 900000 + 3000Q$$
Subtract $$3000Q$$ from both sides:
$$8000Q - 3000Q = 900000$$
$$5000Q = 900000$$
Divide both sides by 5000:
$$Q = \frac{900000}{5000} = 180$$
So, the break-even quantity is 180 units.
**b) Profit or loss at 200 units:**
Calculate total revenue:
$$R = 8000 \times 200 = 1600000$$
Calculate total cost:
$$TC = 900000 + 3000 \times 200 = 900000 + 600000 = 1500000$$
Calculate profit:
$$\pi = R - TC = 1600000 - 1500000 = 100000$$
Since profit is positive, the company makes a profit of 100000.
**c) Profit or loss at 150 units:**
Calculate total revenue:
$$R = 8000 \times 150 = 1200000$$
Calculate total cost:
$$TC = 900000 + 3000 \times 150 = 900000 + 450000 = 1350000$$
Calculate profit:
$$\pi = R - TC = 1200000 - 1350000 = -150000$$
Since profit is negative, the company incurs a loss of 150000.
Break Even Point 28028E
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